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Mexico News-July 28

Posted by The Generals on July 30, 2011, 10:29 am

Mexico keeps calm over ‘Fast & Furious’
The diligent uncovering by the US congress of the US Bureau of Alcohol, Firearms, Tobacco and Explosives (ATF’s) ill-fated ‘Operation Fast & Furious’ has yet to draw much comment from the Mexican government. This studied silence is probably deliberate, because the scandal underlines how difficult it is to combat Mexico’s drug trafficking gangs. The clearly hamfisted US attempt at a sting operation makes Mexico’s use of the army look like an intelligent policy.
The Republicans in both the House of Representatives and the Senate are alleging that the government of President Barack Obama is covering up a major scandal by concealing information on Operation Fast & Furious.
Senator Charles Grassley (R, IA), the senior Republican on the Judicial Committee, and Representative Darrell Issa, (R, CA), who is also chairman of the House Oversight & Government Reform Committee, are heading the Republican investigation into Fast & Furious, holding a series of hearings. Both politicians have sent letters to Robert Mueller, the head of the Federal Bureau of Investigation (FBI), and Michelle Leonhart, the head of the Drug Enforcement Administration (DEA), to ask them what they knew about Fast & Furious.
In early July, the legislators wrote to Eric Holder, the attorney general, after the acting head of the ATF, Kenneth Melson, told them in a closed session that the Department of Justice had instructed him not to give testimony in public. The letter published tracts of Melson’s testimony in which he described the Department of Justice’s attempts to conceal evidence.
On 25 July it emerged that ATF agents had lobbied the District Attorney in Arizona to shut down the programme in March 2010, when information emerged that the weapons in the programme had got though to Mexican gangsters. This evidence came from Democrat congressmen, who are trying to minimise the political damage a cover-up could cause to the Obama administration.
The Democrats point out that in confidential testimony, the interim deputy director of the ATF, William Hoover, ordered the agents running the Fast & Furious operation to close it after 90 days so that charges could be brought against the traffickers. According to Hoover, and other ATF agents, this order was overruled by Dennis Burke, the federal attorney for the district of Arizona. Federal attorneys routinely monitor and supervise federal criminal investigations. Burke, apparently, ordered Fast & Furious to continue to until January 2011.
Hoover said he flew to Phoenix, Arizona in July 2010 to discuss Fast & Furious with officials in Burke’s office. The outcome of this meeting was a decision that Fast & Furious should continue. (It had started in 2009). Hoover and other agents involved testified that they knew of no orders from either senior management at the ATF or the Department of Justice authorising Fast & Furious.
The scandal of Fast & Furious was revealed by a CBS documentary broadcast in March 2011.
The congressional investigation into Fast & Furious continued on 26 July with another hearing by Issa’s Oversight & Government Reform committee. This hearing, entitled ‘The Other Side of the Border’, took evidence from ATF officials who were deployed in Mexico. These officials said that they were kept out of the loop over Fast & Furious. The ATF’s Deputy Assistant Director, William McMahon, told Issa’s committee that, in hindsight, things should have been done differently.
On 26 July the New York Times (NYT) reported that a preliminary report for Issa’s and Grassley’s committees had identified 122 weapons, trafficked under Fast & Furious, that had been recovered at crime scenes in Mexico. The report is likely to be published on 26 July. According to the NYT, the report lists 48 occasions between November 2009 and February 2011 in which Mexican authorities found one or more such weapons. The information in the report is based on internal ATF e-mails, whose Phoenix office set up the operation.
Operation Fast & Furious was an investigation by the ATF’s Phoenix office into a suspected network of “straw” gun buyers who were buying weapons, including a variant of the AK-47 assault rifle, from weapons dealers in the US, for use by drug cartels based in Mexico, where it is illegal to sell such guns. It ran from around late 2009 to early 2011, and 20 people, to date, have been charged in connection with it.
The Justice Department has told Congress that the ATF “was not aware of the majority of these purchases at the time they actually occurred.” It also said that about 600 of the 2,000 guns were purchased before the agency identified the buyer as a suspected straw purchaser. It is not clear how many guns bought by the straw buyers got through to the Mexican gangs.
One ATF report in December 2010 talks of 241 weapons as having been recovered from Mexico; the 26 July report for the congressional committees puts the figure at 122. A now-retired ATF attaché to Mexico, Darren Gil, is on record as saying that by October 2010 700 of the nearly 2,000 weapons sold under Fast & Furious got through to the Mexican gangs.

The Issa and Grassley report describes, according to the NYT, how ATF officials in Mexico noticed, starting in late 2009, that a disproportionate number of the guns that were being recovered at Mexican crime scenes were linked to Phoenix stores. It portrays them as raising questions, and later alarms, about what was happening, only to be told that it was “under control.”
It is not clear whether Pemex used the proceeds of a recent US$1bn bond issue to increase its stake in Repsol.


Weekly Report - 28 July 2011 (WR-11-30)
MEXICO | Immigration. New research from the Pew Center suggests that Hispanics, now the biggest ethnic minority in the US (accounting for 16% of the population), have been the worst affected by the US credit crisis and the subsequent recession. Pew calculates that the average Hispanic household has seen its net worth plunge from US$18,359 in 2005 to US$6,325 in 2009. Such a collapse is corroborating evidence, explaining the slowdown or reversal in emigration from Mexico. Pew reckons that Afro-American households on average saw a 53% drop in their net worth. White households saw their net worth drop by just 16%.
MEXICO | Pemex. On 25 July the state oil company Petróleos Mexicanos (Pemex) announced that it had increased its shareholding in Repsol-YPF. In a statement, Pemex said that there were tax benefits in increasing its shareholding to 5%. Pemex which has had a stake in Repsol since 1979, has not bought any Repsol shares since 2008. Following the 13 July purchase of 825,150 shares, Pemex now has a 4.8% stake in Repsol, making it Repsol’s third biggest shareholder behind Sacyr, which has 20%, and Criteria, which has 12.9%.

MEXICO | Mining royalties. Mining companies and mining analysts are convinced that the next government, of whatever political hue, will introduce a mining royalty of between 1.5% and 5%. Currently none exists. Mining investments in Mexico for 2011 and 2012 are likely to come to over US$9.3bn.

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  • Mexico News-July 28 - The Generals July 30, 2011, 10:29 am
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